Question about bankruptcy ..

[Why Syzygy]

I have an elder family member who is in finacial distress. She has made a deposit to an attorney to file bankruptcy. Her home is paid for, and she receives retirement benefits.

My question is, will bankruptcy relieve credit card bills? I was under the impression that the change in the law meant that there was no longer credit card relief through bankruptcy.

Am I mistaken?

[madinmaryland]

1. I'm glad she has consulted with an attorney.

Depending on her income and assets she may be able to erase her credit card and any other unsecured debt through bankruptcy. If not she may be able to reduce the unsecure debts through a repayment plan.

[Why Syzygy]

2. "may be able"

I'm hoping to avoid digging through a bunch of legalese online to try and figure this out.
I'm not sure I trust the attorney in question. $1,800 seems rather high to file. Doesn't it?

Is there a place that explains in simple terms? This has been so upsetting. Bankruptcy is not going to solve her problems which are more about emotional issues. But at least it can give her another chance to get the help she needs, I hope.

[susanr516]

4. This article is pretty straightforward

I don't know anything about the website, but it looks like it might be a place to start.

http://www.nolo.com/article.cfm/pg/1/objectId/B0B66870-4C52-4303-919B10B9611D3EF9/catId/575C3BE9-F0C1-448E-B5F43D22FE36E9F2/213/161/176/ART/

[Why Syzygy]

8. I'll have to do some research to see what the median

income is in our state. The counseling might be a good thing. Wonder if she is aware of that.

Thanks!

The latest changes to bankruptcy law may be making it harder for some people to file bankruptcy. And a few filers with higher incomes are no longer allowed to use Chapter 7 bankruptcy, but will instead have to repay at least some of their debt under Chapter 13. All debtors now have to get credit counseling before they can file a bankruptcy case -- and additional counseling on budgeting and debt management before their debts can be wiped out. And, because the law imposes new requirements on lawyers, it is sometimes tougher to find an attorney to represent you in a bankruptcy case.

[madinmaryland]

12. Credit Counciling..

When we filed, we were able to do the course on-line, and then speak to a rep for about 10 minutes. They will email you and your attorney a certificate indicating you have taken it. Allow an hour to complete in front of your computer.

We had no problem finding an attorney.

[madinmaryland]

6. Absolutely. I have no idea the actual financial condition of your mother.

BTW, the $1800 your mother is paying is about right. We paid twice that much for ours, though we are in an expensive area of the country. If you are not confortable with that attorney, shop around. We did.

I found good information on FindLaw so that I could understand what and why my attorney was suggesting what I file.

Again, I'm not an attorney, and the only thing you have told us is that she has cc debt and owns a home.

[RebelOne]

10. $1,800 is not a lot. It cost me $3,900 for a Chapter 13. n/t

[susanr516]

3. The way I understand it

She would have to bring in less than the median income for the state in which she lives, or have higher than normal expenses, to qualify for Chapter 7 (the type that discharges debt.) Since she is on retirement, I'm assuming she's receiving less than the median income. I wish her the best of luck in getting out of her financial fix.

[Why Syzygy]

7. I found this ..

which doesn't seem to indicate it is income related. I know I could live quite well in a debt free home with her income. But she has ... issues. I'm just glad she doesn't know how to gamble.

Evaluating credit card discharge issues

Credit card issuers sometimes challenge the discharge of their debt in bankruptcy by filing an adversary proceeding claiming that the debt was incurred by fraud and therefore should be excluded from the discharge under §523(a)(2). This is sometimes called a "non-dischargeability action".

Credit card debt may be non dischargeable in bankruptcy under either of two legal theories:
The application submitted to get the card was fraudulentPull quote

The card was used without an intent to repay; this is far more common Pull quote


This issue used to arise only in Chapter 7 prior to the 2005 bankruptcy code amendments. Now, creditors can contest the discharge of debts in a 13 as well based on a claim of fraud.

http://www.moranlaw.net/plastic.htm

[RebelOne]

11. Debts are not discharged in a Chapter 13.

You still have to pay them off through the court. Believe me, I know. I just came out of a Chapter 13 after paying about $700 a month for 3 years.

[taterguy]

5. A librarian could give you better advice than any of us loosers could

[RebelOne]

9. Credit card relief only if she files a Chapter 7.

I have had two bankruptcies, a Chapter 7 in 1989, which wiped out my debt completely. And I was just discharged from a Chapter 13 in April. I could not file a Chapter 7 because my income was greater than all the bills I owed. So, I had to file a Chapter 13 and make monthly payments through the court until all debts were paid off.

[graywarrior]

13. Depends on what state she lives and files in.

I filed in Florida....big mistake. However they did relieve credit card debt. But you must check your credit after the final date post hearing because I have one company who sold to another company several times and refuses to be moved from my credit report thus still ruining my credit.